简体中文
ภาษาไทย
繁體中文
Indonesia
Gold trading reminder: Bulls still want to "get their hands on" historical highs, waiting for the decisive battle of US CPI
2024-08-14
400
Spot gold fluctuated in a narrow range in early Asian trading, currently trading around $2,463.748 an ounce. Gold prices held steady on Tuesday, hovering near the all-time high set in July despite some profit-taking, closing at $2,464.67 an ounce as U.S. producer price data solidified the Fed's hopes for a rate cut in September, and the dollar and Treasury yields fell; concerns about geopolitical situations also supported gold prices.
The dollar index fell 0.4% on Tuesday, making gold more attractive to holders of other currencies, while the 10-year Treasury yield slid to a one-week low.
Data on Tuesday showed that U.S. producer prices rose less than expected in July, indicating that inflation continued to slow.
Atlanta Fed President Bostic said on Tuesday that recent economic data made him "more confident" that the Fed could get inflation back to its 2% target, but he wanted to see "more data" before he was ready to support a rate cut. He said risks between inflation and the job market are closer to balance, but he wants to ensure the Fed avoids cutting rates too soon, lest it have to raise them later if inflation re-accelerates. Still, if the economy develops as he expects, rates will be lower by the end of the year.
Traders are now looking forward to U.S. consumer price index (CPI) data for July, which will be released on Wednesday, and retail sales data on Thursday. The data could provide further direction for the Fed's next policy move.
"Despite recent profit-taking, ongoing geopolitical tensions and recent market volatility and expectations of rate cuts are still driving investors to safe haven assets," said Alex Ebkarian, chief operating officer of Allegiance Gold.
According to CME's FedWatch tool, traders see about a 54% chance that the Fed will cut rates by 50 basis points in September. Gold tends to be more attractive in a low-interest rate environment.
Concerns that the conflict in Gaza could morph into a wider Middle East war escalated after the killing of Hamas leader Haniyeh in Iran last month.
However, according to the Times of Israel, three Iranian officials said on Tuesday that Iran's attack on Israel may be delayed because negotiations on the release of Gaza hostages and a ceasefire agreement are expected later this week. This suggests that if the agreement is successful, Iran may not retaliate directly against Israel.
According to Israeli media reports, if Iran or Hezbollah launches an attack, the meeting to resume ceasefire negotiations on Thursday may not be held.
On the Russian-Ukrainian battlefield, Russian troops responded to Ukrainian troops with missiles, drones and air strikes on Tuesday, and a senior commander said that these actions prevented the Ukrainian army from advancing. Previously, the Ukrainian army launched the largest attack on Russian sovereign territory since the start of the war.
In addition to the US CPI data, investors need to continue to pay attention to news related to the geopolitical situation on this trading day and pay attention to New Zealand's interest rate resolution.
US producer inflation slowed down, enhancing hopes for a rate cut in September
US producer prices rose less than expected in July, and service costs fell by the largest amount in nearly a year and a half. There are signs that corporate pricing power has weakened, which proves that inflationary pressures are weakening, enhancing hopes for a rate cut in September.
The Labor Department report on Tuesday also showed that most of the elements used to calculate the personal consumption expenditures (PCE) price index performed well. PCE is the inflation measure that the Federal Reserve tracks for monetary policy. Slowing inflation allows the Fed to focus more on the labor market.
The unemployment rate soared to a nearly three-year high of 4.3% in July, exacerbating financial market concerns about a recession, but economists mostly disagreed.
"Producer price gains cooled this month, which is good news for the Fed's efforts to fight inflation, but there was no PPI deflation, so Fed policymakers don't have to rush to judgment and cut interest rates in advance because the economy is going downhill," said Christopher Rupkey, chief economist at FWDBONDS.
The U.S. Department of Labor's Bureau of Labor Statistics said the final demand producer price index (PPI) rose 0.1% month-on-month in July and 0.2% in June. Economists had previously predicted a 0.2% increase. PPI rose 2.2% year-on-year in July, compared with 2.7% in June.
Services prices fell 0.2% month-on-month, the biggest drop since March 2023, after rising 0.4% in June. The decline in services prices reflected a 1.3% drop in trade services prices, which measure changes in profits for wholesalers and retailers, the largest drop in prices in that category since February 2015. Trade profit margins rose 1.4% in June.
Wholesale profit margins for machinery and vehicles fell 4.1%.
A survey released by the National Federation of Independent Business (NFIB) on Tuesday also showed weakening pricing power for companies, showing a sharp drop in the share of small businesses that raised average selling prices and planned price increases in July.
Based on the PPI data, economists' estimates for the core PCE price index in July ranged from a month-on-month increase of 0.14% to 0.2%. These estimates may change after the July Consumer Price Index (CPI) is released on Wednesday. The core PCE price index rose 0.2% month-on-month in June.
Financial markets expect the Federal Reserve to cut interest rates by 25 basis points in September and to do the same again in November and December. The possibility of a 50 basis point rate cut next month cannot be ruled out, but much depends on the performance of the August employment report.
Excluding food, energy and trade, the core PPI rose 0.3% month-on-month, up 0.1% in June. The core PPI rose 3.3% year-on-year, up 3.2% in June.
"Although there will be losses in the transmission from producer prices to consumer prices and the duration varies, today's report is well within the range that allows the Fed to continue to focus primarily on the labor market in its upcoming policy decisions," said Michael Hanson, an economist at JPMorgan Chase. (End)
The dollar and U.S. bonds fell to a one-week low
The dollar index fell 0.5% to 102.61 on Tuesday, dragged down by the PPI data. The lowest intraday was 102.55, the lowest since August 5.
"The latest PPI is undoubtedly good news for the market," said Helen Given, deputy director of trading at Monex USA. "Traders are viewing this as a prelude to the U.S. CPI, which markets have been preparing for as a potential volatility-inducing event after last month's data showed prices actually falling."
U.S. Treasury yields fall as good producer inflation data strengthens hopes for a September rate cut
U.S. Treasury yields also fell to a near one-week low on Tuesday.
"CPI and PPI are not highly correlated, and the market took this data lightly," said Vail Hartman, U.S. rates strategist at BMO Capital Markets in New York. PPI shouldn't throw the Fed off course because some of it is included in the calculation of the personal consumption expenditures (PCE) price index, which the Fed relies on most to guide policy.
"Looking at the PPI data, especially some of the factors that go into the core PCE calculation, I don't think there's anything really concerning, and, from a broader perspective, I think the data is consistent with the narrative of a retreat in inflation."
"The market is hoping that the data confirms that the economy is slowing, which will also provide more reason for the Fed to cut rates," said Kim Rupert, managing director of fixed income at Action Economics in San Francisco.
Futures markets are pricing in about a 54% chance of a 50 basis point rate cut in September and a 46% chance of a 25 basis point cut, a sharp reversal from forecasts late Monday. Traders expect the Fed to cut rates by a full percentage point this year.
The 10-year Treasury yield fell 5.5 basis points to 3.854% on Tuesday, about 4 basis points below its level before the PPI report.
The two-year yield, which typically moves in sync with interest rate expectations, fell 7.1 basis points to 3.9439% on Tuesday, with most of the decline recorded after the report was released.
Russia strikes back at Ukrainian forces in Kursk
Russian forces responded to Ukrainian forces with missiles, drones and air strikes on Tuesday, actions that a senior commander said had stopped the advance of Ukrainian forces after they launched their largest attack on sovereign Russian territory since the start of the war.
A week ago, thousands of Ukrainian soldiers breached the border and attacked Russia, an attack Russian President Vladimir Putin said was aimed at improving Kiev's negotiating position ahead of possible peace talks and slowing down the Russian advance.
The Ukrainian assault forced Moscow to evacuate nearly 200,000 people while using its reserve forces.
Russian battlefield bloggers reported heavy fighting on the Kursk front as Ukrainian forces tried to expand their control, but they said Russia was mobilizing soldiers and heavy weapons and repelling multiple Ukrainian advances.
The Russian military said it destroyed 35 Ukrainian tanks, 31 armored personnel carriers, 18 infantry fighting vehicles and 179 other armored vehicles in the week-long battle.
"The enemy's reckless rush has been stopped," said Maj. Gen. Apti Alaudinov, commander of Chechnya's Akhmat special forces. "The enemy has realized that the blitzkrieg they planned did not succeed."
It was not clear which side controlled the Russian city of Sudzha, where Russia pipes natural gas from western Siberia through Ukraine to Slovakia and other European Union countries. Gazprom said on Tuesday that it was still sending gas to Ukraine through Sudzha.
Alexei Smirnov, acting governor of Kursk region, said on Monday that Ukraine controlled 28 villages in the region, with an incursion of about 12 kilometers deep and 40 kilometers wide. Ukraine claims to control 1,000 square kilometers of Russian territory, more than double the Russian figure.
Putin told officials at his Novo-Ogaryovo residence outside Moscow that Russia would push back Ukrainian troops and said Russian forces were accelerating their advance in other parts of the front.
Still, the occupation of Russian territory by foreign troops is embarrassing for the Russian military and Putin. The invasion of Ukraine is the most serious incursion by foreign troops since Nazi Germany invaded Russia in June 1941.
In a nighttime speech, Ukrainian President Volodymyr Zelensky told Ukrainians that Russia's actions were a matter of security for Ukraine, and that Russia had repeatedly used the Kursk region to launch strikes against Ukraine.
But Ukraine's transfer of troops to Kursk could leave other parts of the front line empty as the Russian army continues to advance. Russia's army is much larger and may try to encircle Ukrainian troops.
Ukraine's Western allies said they had no advance warning of Ukraine's attack on Russia. Western countries have been trying to prevent the Russo-Ukrainian war from escalating into a direct confrontation between Russia and NATO, led by the United States.
Putin said the West is using Ukraine to fight a proxy war with Russia and that the Ukrainian army's border incursion is an attempt to undermine Russia's domestic stability.
The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.
CM Trade
As a world leading financial trading platform, CMtrade Provides comprehensive one-stop trading services and opportunities for traders.
[Products]
The platform provides over 32 kinds of popular financial products such as forex, precious metals, crude oil, indices, cryptocurrencies and more.
[System]
2 top trading systems CM Trade MT4 / CM Trade APP, powerful and easy to operate
[Service]
Comprehensive market news, professional market analysis, 7*24 hours online customer service
[Advantage]
Low cost, high leverage, flexible one-stop all day two-way trading.
[Authority]
Licensed and strictly regulated by authorities. Traders deposits are independently kept by the bank. Fast deposit and withdrawal. Fair, efficient and transparent trading environment.
Follow us to learn more
Free AccessDaily Trading Strategy
Download Now
CM Trade Mobile Application
Economics Calendar
MoreYou May Also Like
